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THE LIQUIDITY HUBʼS GUIDE ON

REATIL FADE TRADING.

Introduction
Hello my name is The Liquidity Hub and I have been trading for 5 years now. In
that time Iʼve traded many methods. Support and resitance to ICT, EMA cross
overs to algorithmic trading bots. In my opinion any of them can work and its
down to the trader and their judgment of their edge and risk management. No
matter what method you use though you are a retail trader. Even me.
How ever the one thing that puts me apart from the normal retail trader is my vast
knowledge on liquidity concepts. You'll learn later what these are. Over the past 3
years ive focused time on perfecting these into a system that will allow me to gain
an edge over the markets. Keep in mind that these are all concepts and even
though they work for me they may not work for you. However to get to this point
Iʼm at it has taken me 5 years so if this doesn't work for you in the first week donʼt
cast it aside like the many other strategies you have tried. If you do theres a high
chance that you wont make it in this industry.

Retail fading in forex refers to a specific type of fading strategy that targets the
trading behavior of retail traders. In this strategy, traders take positions opposite
to those commonly held by retail traders, who are often seen as being on the
wrong side of the market. The assumption behind retail fading is that retail traders
tend to make emotional or less-informed decisions, such as buying at market tops
or selling at market bottoms. In short the aim is to identify the most vulnerable
points of where retail stop orders are and use them as a catalyst to move the
market in our direction.

This course will be broken into 6 simple stages:

Inducement.

Fair value.
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Liquidity candles

Daily templates.

Execution methods

Examples

NOTE This guide is

NOT for beginner traders. You must have done some basic liquidity training before
hand.

Inducement.
Inducement is the main core concept of fading. Its essentially the point were retail
traders will place their stops for their executions. We wait for these to be
liquidated as they can often provide a catalyst for a reversal. These can be highs
or lows but it is not every high or low. To spot the most effective we will be using
Fractals indicator by Newphew sam.

https://www.tradingview.com/script/OM1swibQFractals-Nephew-Sam/
We will only make one change to the settings here by changing the fractal value to
5 not 3.
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You should now see some red and green triangles. The green one signal sell stop
order (bullish inducements) and the red signal buy stop orders (bearish
inducements). Once price liquidiates one of these inducements then price could
reverse. I will use the 1H/15m/5m to identify inducements. The best inducements
come from the H1 and 15m from the previous day. Inducements from the 5m and
same day have a lower strike rate.

Here we can see that on GBPCHF we have larger reactions from the inducements
from the previous day rather than same day inducements. As well as inducment
highs and lows we also trade Primary inducement PIDM and secondary
inducement SIDM.

These are just QMs that happen on the 5m timeframe.

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Just to confirm for me a QM must liquidtate a fractal and then take out the
high/low that took it out. We know a lot of retail traders use this as an entry pattern
so we should asume there are a lot of stop orders at the lows/highs of these QMs.
Some traders also use this to understand structure. The LTF finds it very hard to
stick to structure from my experience so once these get liquidated then it could be
a catalyst for a pullback. The red ones are PIDM and blue is SIDM. To complete a
range we must have a QM low and QM high any other QM in there that doesnt
complete the range will be SIDM. Just like the normal inducments PIDM is stonger
than SIDM. Just to confrim we dont use these ranges for directional bias only
inducments.
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Now putting the inducements together we can use these together to combine
levels that are going to provide more likely reversals than others.

If we have more than one level in the near one another both of them will likely be
taken before the reversal.

When we take an inducement we want to see a nice push with conviction with two
strong bullish/bearish candles on the 5m.
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Above are two charts showing how we take inducement. The first chart is showing
very confident and strong inducement candles where as, the second we only have
one strong candle that takes the inducement and one pin bar. This gets liquidated
shortly after.

Fair value.
The next concept i use is fair value FV. This is when price has moved away with
impulse and we have fair value gaps. Price then needs to fill these gaps and offer
fair value. The timeframe I use this on is the 15m. If we come into a fvg and fill it
we can then look to trade away from that fill.
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Lets look at the same GBPCHF chart but only focus on FV. You can see price
hunts out fair value. Once sufficient downside fair value has been met then it will
search for upside fair value. This cycle happens over and over again.

To use this we can simply go back to showing everything so far on the chart.
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If we have a PIDM/SIDM or normal inducement near a 15m FVG then we should

wait for the FVG to be hit before entering. Iʼve found that these can also work well
with continuations when you missed the original liquidation NOTE if you expect a
full fvg full every time for the continuations then you may miss the trade so just
look for an sensible poi near the FVG fill.

Here we have some examples of how I would do this. I wont enter from these
zones but will instead look for entry on the 1m or 30T here.

Liquidity candles.
We should know basic liquidity concepts like EQH/L and TLLQ however theres two
types of candles that hold the most LQ in my eye. These are pinbars and dojis,
from now on i will refer to them as liquidty candles LCʼs). To use these we must
see one on a high or low on the 1H/15m/5m. The reason why these are high LQ
points is because that when new traders go to sites like baby pips or watch
something on youtube they will be told to enter at support/resistance if they get
one of these candles. If they enter there then their stop orders will be
above/below it depending if its a long or a short.
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To make it easier to spot these LCʼs I have made an indicator that auto highlights
dojis and pinbars with 30% or less body to wick ratio. To apply it to the charts all
you need to do is make sure your pine script log is all clear and then copy and
paste the following into pine script and click add to chart:

//Colors candles with body less than 30% of range of candle by T

study(title = "<LC Finder", overlay = true)

candr = high-low
bodyr = open-close

borat = (bodyr*100/candr)

barcolor (borat>-35 and borat <30 ? white : na)

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Theres a few ways I like to use LCʼs. The first one is to strengthen inducements. If
we have a LC on a inducement then we can look to trade away from this. If the LC
is in the asain range then we can look to play asain midline plays from the
liquidiation of the LC there

The second way is to confirm it the inducement is going to provide a good

reaction or not. If we take an inducement and the move that took it has a LC then
we can look to target that to give up the momentup to fufill our true move. We can
have 2 deveations of this bfore the LC is rendered invalid.
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Daily templates
The next tool I use is daiyl templates. These give me a rough idea of what price
can do. We wont recreate the template perfectly each day otherwise that would
be to easy and everyone would notice. Here is an template for each with real life
examples.

AMD  Continuation
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AMD  Reversal
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Asia Break  Retest

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Whipsaw
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Execution methods.
I always say that entry is the easiest thing to do. If you can nail identifying the
right inducements and high probability areas of reversal you can enter off the
simplest thing like an ema cross over if you wanted to. Below ive shown two
methods that i use to enter and execute.

1m method

The first method is a very simple and effective method. Once we come into a level
where i think price will reverse from I will look for simple buildup and then that
build up to be taken. Next I want wait for 2 candles that close strongly in the
direction i want to trade. Mark these two candles out and enter as close to the
50% you can get. Sometimes we dont get a fill of the 50% and instead we fill in
the 30% level. Its up to you if you want to go with 50% or 30% but you will often
have a larger SL with the 30%.
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In this case you would have been tagged in on the 30% and not the 50%.

Tick chart method

To get the tick chart you will need to have access to a cTrader account. I
personally use fusion markets for tick data. You should be using the 30T chart.

https://fusionmarkets.com/

This is very similar to the first method in terms of build up. We then see price take
that out and give a QM. You can either enter on the close of the QM and enter
straight away or you can wait for the retest. Some times on the tick chart you wont
the return to the level so entering on the close can be an advantage.
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Here we can see the trade above from the 1m method but instead we took it on the
30T and nearly halved the SL size and increased the RR gain.

If we get either of these setups round the following times these are seen as
golden trades for me:

0930

1100

1430
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1600

The reason for these times are bassed either on CLS timings, NYSEO volume or
London sell off

The times I try to avoid trading:

07000800

12001300

The reason for these times is its just the first hour of each session open and most
traders are liquidated after entering emotionally. This creates a trap so any setup
in that time is normally a no go for me.

Example trades.
XAUUSD 13/09/2024 7R
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This trade only had a tick chart entry on the close through indicated by the arrow.

GBPJPY 12/09/2024 9R
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This trade was using the 1m entry method.

EURUSD 13/09/2024 10R

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BTCUSDT 11/09/2024 7R
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